Kilz specifications only allow their products to be thinned by
10%--but they don't recommend thinning if trying to hide stains.
Make sure if your painter is using a Kilz product that he get's the
right one for your job. If it is an exterior job "KILZ Exterior" or
"KILZ Premium" is what is required. (Personally, I got better results
with BIN 123 for a latex exterior primer).
I never thinned paint with water, but occasionally I did thin paint
with "Floetrol". This is a product that slows down the drying time of
latex and lowers the amount of pressure needed to spray. In general,
Floetrol makes latex more like an alkyd to work with. It's a great
product and a lot better than diluting the paint with water, IMO.